On 14 April 2026, the European Central Bank (ECB) published its Eurosystem response to the European Commission’s targeted consultation on the competitiveness of the EU banking sector.
Background
The ECB sets out that its proposals in this response to the Commission’s consultation are intended to enable banks, and the financial infrastructure in which they operate, better able to support the economy and have been endorsed by all euro area central banks. Further, the ECB explains that the Governing Council’s proposals to simplify EU banking rules published in December 2025 form the basis for the response and should be read together with this consultation.
Summary
The ECB proposes changes to the relevant banking rules, including:
- Shifting the banking rules from directives to directly applicable regulations: The ECB recommended that there should be a structured review of options and discretions assigned to Member States in the CRR, CRD, BRRD and associated level 2 or 3 legislation, with a view to enabling further legislative harmonisation while also respecting the need to cater for national specificities. In addition, the ECB set out that this review could also consider whether certain provisions currently set in directives, such as those pertaining to the provision of financial services by third-country providers or related to qualified holding procedures, could be established in directly applicable regulation.
- Merging the existing five macroprudential buffers into two: The ECB also suggests that the existing five macroprudential buffers could be merged into two buffers, namely a non-releasable buffer (merging the current Capital Conservation Buffer and the buffers for Global and Other Systemically Important Institutions) and a releasable buffer (merging the current Countercyclical Capital Buffer and Systemic Risk Buffer).
- Increasing proportionality for small banks: In addition, the ECB proposes regulatory changes to facilitate and further increase consistency in the application of the proportionality principle in supervision, while also highlighting that it considers that any simpler regime for smaller banks would need to be accompanied by a credible, flexible and efficient crisis management framework for these institutions.
- Streamlining reporting: The ECB also highlighted that the High-Level Task Force on Simplification has issued six recommendations outlining relevant areas for simplification, including fostering data sharing among European authorities through the Joint Bank Reporting Committee, establishing a fully integrated European reporting system, defining a supervisory tolerance margin for errors based on a materiality concept, publishing an inventory of non-market sensitive reporting requirements imposed on banks, periodically reviewing the relevance of reporting requirements and reforming the EU public disclosure process.
- Being made responsible for taking a holistic view of the overall level of capital: The ECB also suggests that while macroprudential policy decisions should remain at national level, with possible top-up measures by the ECB, and the ECB’s supervisory powers should remain unchanged, there is a need for increased coordination and a process whereby the overall level of capital demand and cross-country heterogeneities can be discussed from a qualitative angle.